Timely commissioning of renewable projects key for India to achieve NDC targets: Govt

Representation of a floating solar project

Delay in the commissioning of non-fossil fuel-based power generation capacities is going to be one of the biggest challenges before India in achieving its Nationally Determined Contribution (NDC) targets, according to the government and experts.

As per the latest NDC targets, India has committed to reducing the emission intensity of its GDP by 45 percent by 2030, from the 2005 level and achieving about 50 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.

As on March 2023, the installed capacity of the country was 415.4 gigawatts (GW), which comprises 236.68 GW from thermal (211.8 GW coal and lignite and 24.8 GW gas), 6.78 GW from nuclear, 171.8 GW from renewable energy sources (42.1 GW large hydro, 66.8 GW solar, 42.6 GW wind, 4.7 GW small hydro, 4.8 GW pumped storage projects, 10.8 GW bio-power).

According to a report published by the Central Electricity Authority (CEA) this month, India would require anywhere between 12.7 GW and 19.1 GW of additional coal-based capacity if non-fossil fuel-based projects are not commissioned on time. This projected requirement of coal capacity will be in addition to the 26.9 GW that is already under construction.

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The CEA projected a peak electricity demand of 334.8 GW and an electrical energy requirement of 2,279.7 billion units for 2029-30, thus, making timely capacity addition the key for India to ensure energy security.

But with the onset of the Covid‐19 pandemic, the pace of energy development in the country has taken a hit. "The generation capacity addition by different sources has got adversely affected in the short run with lasting impacts. The strict lockdown to arrest the pandemic halted construction activities due to a lack of manpower and supply chain issues. Delay in manufacturing and installation of various projects due to disruption in the global supply chain led to difficulties with the availability of key components leading to delays in execution of projects," the CEA stated in its report.

While solar projects were worst affected due to this with at least 25 GW of projects still stuck, the story is no different for hydropower projects, which not only face geological issues but also resentment from the locals leading to years of delay. The commissioning deadlines of at least seven hydropower projects have been pushed by a year or more.

Also read: 7 hydropower projects with 3,110 MW capacity to be commissioned in FY 24.

Understanding the need for timely commissioning of power projects to meet India's NDC targets and growing energy demand, Union Power Minister RK Singh last week talked about taking punitive action against developers defaulting on such projects.

On May 25, Singh said failing to meet the Scheduled Commercial Operation Date (SCOD) would attract a ban of one year from any further bidding processes and defaulting the second time would lead to a ban for a period of five years.

"Businesses think if there is a bid, they must grab as much as possible. If the rates are not favourable or profits are not 25-30 percent, then they just put the project on hold. That will not work. I have nearly 50,000 MW of capacity for which people have won bids and are sitting on it," Singh said.

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Vikram V, Vice-President & Sector Head - Corporate Ratings, ICRA Limited, stated that renewable energy (RE) based power generation capacity increased at a CAGR of 13 percent over the past four years and stood at 125 GW as of March 2023, constituting 30 percent of the overall installed generating capacity, increasing from 22 percent as of March 2019.

"However, this is lower than the 175 GW capacity targeted by the government owing to the impact of Covid-19 as well as slower than expected progress in the rooftop installations. Nonetheless, the sector has achieved significant progress over the past four years adding 45 GW capacity and increasing the share of renewables plus hydro in generation mix to 23 percent in FY2023 from 19 percent in FY2019," Vikram told Moneycontrol.

"Scale-up in tendering activity for RE projects along with the timely signing of PPAs, easing of execution challenges mainly related to land, augmenting transmission infrastructure and development of domestic manufacturing ecosystem for renewable OEMs remains important. Also, availability of adequate financing avenues and consistency in the policy environment would remain key," he said.

The government has committed to increase India's non-fossil fuel-based power generation capacity to 500 GW by 2030.